Richard Florida
by Richard Florida
Mon Mar 30th 2009 at 8:26am UTC

New (Government) Boomtowns

Guess what cities and regions are doing best in the face of the economic crisis? Capitol cities from Washington to Ottawa and beyond. Newsweek dubs them “cities beyond the pain.”

Remember company towns? From Detroit to Wolfsburg, Germany, home to Volkswagen, they used to be places where you could count on a job for life. Now, they are mostly places where you count your unemployment checks. But as the global economy shrinks … and the public sector expands to cope with the fallout, there’s a new kind of boomtown—the government town.

In places like Brasília, Ottawa, Brussels and Washington, not only are new jobs being created, but home sales are rising, incomes are up, car dealerships are full, and new malls, shops, luxury hotels and gyms can’t be built fast enough. …

Last year, home building nose-dived throughout Canada—except in Ottawa, where industry is scant and one in five workers draws a government paycheck. In the Canadian capital the resale price for condos jumped nearly 12 percent in 2008 and 5.7 percent for single-family homes …

Ditto Washington, where 28 percent of the District’s paychecks are cut by the various layers of the federal bureaucracy. While the private sector has shed 4.6 million jobs since December 2007, when the economic contraction began, the federal government has hired 200,000 workers, according to the Bureau of Labor Statistics. The new administration will likely create another 400,000 temporary jobs and 180,000 permanent ones. No wonder D.C., without a factory in sight, was the nation’s second-fastest-growing job market (after Alaska) in 2008.

Perhaps the biggest prosperity bubble of all is in Brasília, where more than 50 percent of jobs depend directly or indirectly on the state. The Brazilian economy will be lucky to grow at all this year, but Brasília is booming. Wages are already four times the national average and are predicted to grow again this year …Home sales rose 25 percent last year and are expected to climb another 20 percent in 2009 compared with a 15 percent drop nationally.

State capitals and university towns are also doing well. These are classic post-industrial cities which never had big factory complexes and large shares of working class jobs which are hardest hit in the crisis.

But many are more than government towns. Washington, D.C. and Ottawa both have large tech sectors, large concentrations of human capital, and among the highest concentrations of the creative class (40+ percent) of North American regions. Both are hubs of large mega-regions which include their country’s economic, financial, and media centers, New York and Toronto respectively. But despite Newsweek’s moniker, there is plenty of pain in the greater Washington, D.C. region: despite having three or four of the country’s wealthiest and most highly educated counties, it also has one of the highest levels of economic inequality with considerable, concentrated poverty, and economic dislocation.

The impacts of the crisis are uneven and continue to reflect the fundamental trajectory of the ongoing economic transformation from an industrial to a creative economy, the big sort, and an increasingly spiky and unequal world.

2 Responses to “New (Government) Boomtowns”

  1. Mike L. Says:

    Thought-provoking typo in the first paragraph, “Capitol”. The “Ottawa Capitol” was a “movie palace”. Perhaps the Washington Capitol is also becoming a surreal palace.

  2. mickey Says:

    While cities like Ottawa may be more successful in navigating the economic downturn, I think that it’s a stretch to consider it a haven of creativity. Government jobs will keep the economy afloat, but do little to harness one’s creative energy. In many cases, it would seem that a steady paycheque with (relatively) few demands and unparalelled job security leads to stagnation.
    Given the cultural opportunities residents have at their disposal (galleries, museums, proximity to mtl and to, etc.) why do so few creative talents emerge from the city, your very own Kwende not withstanding?
    The bureaucracy acts like a parachute in times of economic downturn, but really slows you down when you’re trying to run forwards.